Australia’s economy expands 2.3% in the first quarter

View of the Yarra River flowing by way of Melbourne metropolis centre in Australia.

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Australia’ first-quarter gross home product expanded by 2.3% year-on-year, simply barely beneath analyst expectations.

Economists polled by Reuters had forecast an growth of two.4%, in comparison with the two.7% growth within the fourth quarter of 2022. On a quarter-on-quarter foundation, GDP grew by 0.2%, in comparison with the 0.3% anticipated within the Reuters ballot.

Katherine Keenan, head of Nationwide Accounts at Australia’s Bureau of Statistics, mentioned: “That is the sixth straight rise in quarterly GDP, however the slowest progress for the reason that Covid-19 Delta lockdowns in September quarter 2021.”

“Personal and public gross mounted capital formation had been the principle drivers of GDP progress this quarter,” Keenan mentioned.

The GDP readings are key to the Reserve Financial institution of Australia’s resolution making course of for its financial coverage. Simply on Tuesday, the RBA shocked markets and raised its benchmark coverage charge by 25 foundation factors to 4.1%, an 11-year excessive.

‘The slim path’

Early Wednesday morning, Reserve Financial institution of Australia Governor Philip Lowe delivered a speech on the Morgan Stanley Australia Summit, reiterating his place that the central financial institution will search to navigate a “slim path.”

On this “slim path” that Lowe envisions, Australia’s inflation returns to its 2-3% goal vary, the financial system continues to develop, and positive factors within the labor market are preserved.

“It’s nonetheless potential to navigate this path and our ambition is to take action. However it’s a slim path and more likely to be a bumpy one, with dangers on either side,” Lowe mentioned.

Lowe clarified that the intention to protect labor market enchancment “doesn’t imply that the [RBA] will tolerate larger inflation persisting.”

As such, the choice to extend rates of interest once more was taken on Tuesday “to supply higher confidence that inflation will return to focus on inside an affordable timeframe,” he mentioned.

It is a breaking information story, please heck again later for extra.

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